It appears that today U.S. Representative Bob Goodlatte of Virginia introduced a piece of legislation to broad bi-partisan support which is aimed squarely at cutting down on the number of frivolous and abusive patent suits which are roiling the technology industry.

The proposed legislation would institute a “loser pays” system for attorneys’ fee awards, would delay burdensome discovery requests until the court has first interpreted the disputed patent, and would increase transparency of patent ownership (curtailing patent troll’s favored M.O. of using multiple shell companies to hide behind and/or use a fronts in patent litigation).

This proposed litigation, while not necessarily a panacea for the the intelelctual property problems currently facing companies in the technology industry, would certainly go a long way to curb some of the more egregious and abusive tactics currently being utilized by non-practicing entities (a/k/a patent trolls).

It will be interesting to see if this bill will actually be passed into law. Here’s to hoping!

A disturbing new trend is emerging in the world of patent litigation. Non-Participating Entities (“NPEs” or, more colloquially, “Patent Trolls”) have now started threatening, and in some cases suing end-users of technology which the NPEs are claiming infringes upon patents they now own.

In the ArsTechnica article above, you can read the tale of an Atlanta-based IT services company, BlueWave, who recently tangles with such a troll. In this instance, the NPE, through a law firm, was seeking to “settle” an infringement claim against BlueWave for making use of scanners to create .pdf documents from hard copies and then e-mailing and otherwise distributing the .pdf files (as just about every business in this country now does). Of course, it sounds ridiculous on its face that this could be a violation a valid patent, and yet, there do exist several patents which claims to cover this series of processes.

While it is probable that these patents (and many like them) are vulnerable to attack, NPEs are increasingly making use of such patents to press for settlements from companies who they believe are unlikely to go the time and expenses of fighting off such claims (or seeking to invalidate the underlying patents). In some cases, the NPEs are even filing suit, in hopes that by increasing the pressure on the alleged infringer, that a settlement will result.

Technically, there is nothing illegal about such tactics. At the same time they reek of bad faith and dubious business practices. At a minimum, they certainly represent a perverion of the intent behind our intellectual property system.

Legitimate or illegitimate though, we can expect to see much more of this kind of behavior.

Based in this article from GeekWire, it looks like the University of Washington (a public institution, I believe) may have set itself up for a bit of a First Amendment issue with its “Live Coverage Policy” for journalists credentialed to cover its sports program.

The policy explicitly limits journalists to 20 Tweets per basketball game and 45 per football game. Violations can result in revocation of the violator’s press credentials. As a public institution, and thus, arguably, a “state actor”, the UoW may be violating the First Amendment with this policy.
Even if it is not, it certainly raises (once again) the issue of social media in the press and what its implications are for First Amendment speech (including, but not limited to freedom of the Press).

Of course, there are (albeit distant and indirect) additional issues of trademark, fair use, and the role of public university ownership and use of intellectual property implicated in these situations as well. Those, however, are subjects for another time.

Updated: Sometimes the language we use fails to capture the essence of what we’re doing when we are online, or lulls us into a false sense of security about our behavior and what it means. For example, we’ve gotten pretty used to the idea that we can “buy” ebooks from Amazon (s amzn): we just click a button and pay with a credit card and there it is on our Kindle. Except that we aren’t really buying it in the traditional sense of the word; we are merely renting it, or paying for access to it under a specific set of circumstances — and a recent incident in which a woman’s account was blocked and all of her books removed without explanation is a healthy reminder of that.

Norwegian technology blogger Martin Bekkelund describes how his friend Linn Jordet Nygaard found that her Amazon account had been shut down…

A recent article on GigaOm.com discusses a recent study which documents a significant spike in the number of patent suits being brought by NPEs (or “trolls” in common parlance), with such suits now making up nearly 40% of all patent litigation.

Even more disturbing is the fact that typical costs in patent litigation are now ranging from $650,000 to $5 Million (depending, largely, on the amounts of money at stake). This is a huge amount of money being tied up in IP fights that could otherwise be used in R&D or to otherwise drive innovation or fund job growth.

Of course, filed patent lawsuits are only the tip of the iceberg. This does not not include the impact of IP disputes which do not even reach the litigation stage involving threats, forced licensing deals, and disputes which settle on other bases before litigation.

In it’s seventh installment on the iEconomy, The New York Times focuses in on the dysfunction in the current patent system. The article uses as a graphic example of the carnage regularly be wrought on certain sectors of the innovation economy the cautionary tale of a small-sh technology company names Vlingo.

Vlingo was a voice-recognition software company which became embroiled in a patent infringement suit with a much larger rival, Nuance. Vlingo ultimately prevailed at trial, but the expenses were such that company was completely drained at the end of the litigation and ended up being acquired by Nuance (the result that Nuance apparently wanted all along).

The NYT article is a good read for a view of just how broken the current system is. The article is by no means perfect. (The Apple enthusiast site imore.com correctly takes the NYT article to task for almost loosing the point of the impact of the patent system on small, outsider innovation company in its examination of Apple’s role in the process.) Nevertheless, the article does get the essential point across: in the process of trying to encourage innovation through the protection of intellectual property, the current system is now subverting its own goals, by creating an environment in which only the massive players at the very top of the market can afford the huge costs of protecting intellectual property (and protecting themselves from attempts to use IP laws to crush competitors).

Although I spend a lot of time attempting to raise awareness of the problems with our current intellectual property laws, much of my writing leave unanswered the question of what, as a company attempting to navigate these complicated and sometimes treacherous waters, should I do. Outside of actively pressing for updates and reforms to our current laws, there are actually quite a number of things that innovation companies can and should be doing.

While these steps will (and need to be, given the complexity and length of the subject matter) discussed in detail in subsequent blog posts, the two most important steps companies can take are: (1) take affirmative steps to protect your intellectual property, (2) ensure that you have processes in place within your company (or through outside resources) to ensure that your products and services are not infringing on the intellectual property of others. Both of these are significant undertakings for an innovation company, particularly ones still in the early-growth phase. These, however, are critical business considerations and failure to incorporate them into a company’s business plan can have dire consequences. As such, planning and budgeting for these as an integral part of a business’ development is a critical risk-management step.